Monday, April 8, 2013

Outlook For April 2013

[This post and videos were created on 28th March 2013 and were pending updates for the charts]

Well Spring Equinox did not give as much traction as it usually tends to give. 2 consecutive closes above 5740 helped Nifty to reach the indicated target but the gains could not be held on to.

Resistances and Supports remain as follows for April series in Nifty

Supports: 5408-5440-5480-5532-5580-5608

Resistances: 5608-5655-5690-5740-5810-5880

Nifty/BankNifty Daily/Weekly Charts

Unless 5740 is not taken out on upside for 2 consecutive sessions, it is difficult to move ahead. The market breadth has been very negative especially with mid-caps and small-caps. Usually a major fall in market is preceded in this pack followed by largecaps. Now we have 2 potential views moving ahead

Bullish View: The falls in March have been profit booking sessions and risk-aversion by fund houses given global cues. If this view holds good, we may see one more shy at 5944 and if we get 2 consecutive closes above 5944, then 6080-6180 will be the logical targets. 2 closes below 5380 negate this view.

Bearish View: A top is in place. The fall from Nov'11 to Dec '12 was a Large A wave, the rally from Dec '12 to Jan'13 was the Large B wave and the current downtrend is the Large C wave down. This gives us downside targets of 4400-4600 levels over the next 8 months. 2 consecutive closes above 6180 negate this view.

My personal bias is leaning towards the bearish view as I have been indicating for the last 6 months or so. If the bearish view is intact, we may see a rally to 5740-5880 levels in April on upside followed by a fall to 5080 by mid-June. The previous fall was apprx 6100-5600 = 500; 500 x 1.618 = 810; 5880 [expected top] - 810 converting to about 5092 on closing basis on downside. this fall will be fast and furious as it will be the 3rd wave to the down.

Please take it with a pinch of salt as this is my personal opinion; I will never recommend buying OTM Puts or blindly shorting the market as always. One needs to wait for the appropriate signals to emerge from price action.

I would also encourage all EW enthusiasts to take an objective view. The EW principles are well defined and provide both bullish and bearish scenarios. Over the last 6 months, Bob Prechter and teams obsessions with their personal outlook has damaged far more than benefit followers. That is not because the EW theory is wrong, but whenever personal outlook clouds price action on ticker, objectivity flies out of the window.

Attached is the free pdf document shared by the EW Team last month. Look at the outlook for India given on the basis of the automotive segment!!! India always rallies with Banks, Infrastructure and Capital Goods segment. Part of the false confidence from the EW team comes from the fact that they identified the previous rally with CNXIT [as good as a random walk principle perpetrated by Bob Prechter himself in his article 'The Stock Market is Not Physics'!!!

Other Market Updates
What happened in Cyprus is just a pre-cursor to what can be expected out of Europe. As mentioned earlier, the Euro-zone breakup is inevitable. It is just a matter of time. 2013 and 2016 remain the most high probable years for the same to happen. This is logical from the \Fibonacci Time Series models as well

1987 - The flash crash of roaring 80s; 1987 + 13 = 2000; Dot-Com Bust;
2000 + 13 = 2013 So this is one highly probable year.

2000 - Dot-Com Bust; 2000 + 8 = 2008: Lehman Brothers' Crisis
2008 + 8 = 2016 So this is another high probable year. Given the state of elections still pending in many global economic superpowers, Im inclined to believe that the breakup will happen in 2016

Unlike what many market experts are yelling, there will not be any armageddon. The world will continue to exist as it is, and people will move ahead in life - simple. Yes if something will happen, definitely such events will shift balance of powers to emerging economies. The Indian Nifty is bound to go up North in the longer run.

So for the Indian investor, one should wait for sub 5k levels or the psychological 4800 level; regardless of what doomsday experts have to say, one should enter the market fearlessly at these levels with maximum exposure to Benchmark Index ETFs. Daily trading ideas are shared by Sanjay Raghuvanshiji on the other blog.

So that is just about it and we hope you make a profitable trade / investment as we move along.

Video Link1:

Video Link2: